Overview
On August 6, 2025, President Trump signed an Executive Order ("E.O.") titled Addressing Threats to the United States by the Government of the Russian Federation, imposing additional 25% ad valorem tariffs on imports from India. Following the E.O., this action was taken in response to India's continued purchases and resale of Russian oil, which the E.O. characterizes as undermining U.S. sanctions and contributing to Russia's war effort. The E.O. also establishes a monitoring and recommendation framework, directing the Secretaries of Commerce, State, and Treasury to assess other countries' involvement in Russian oil imports and recommend similar tariff actions.
This action builds upon the July 31, 2025 E.O. titled Further Modifying the Reciprocal Tariff Rates, which imposed additional tariffs on a number of trading partners including India. That earlier E.O. was framed as a response to unfair trade practices and national security concerns, and imposed the 25% base tariff on Indian imports.
The action follows statements by the President last week concerning the imposition of secondary tariffs on Indian imports, with an additional "penalty" to be imposed in connection with India's trade and defense ties with Russia.1 Despite the imposition of the base 25% tariffs, reports indicated that India has no intention of halting its purchases and resale of Russian oil.2 August 4, that he would substantially increase the tariffs if India continued this practice.3
The base 25% tariff from the July 31 E.O. goes into effect on August 7, 2025. The additional 25% tariff imposed under the August 6 E.O., specifically targeting India's involvement in Russian oil, will take effect on August 27, 2025, resulting in a combined 50% tariff unless exemptions apply. We note that discussions between the U.S. and Russia to end the conflict in Ukraine are ongoing, and this situation is dynamic and rapidly developing at this time.
Background of the Proposed Tariffs
Prior to the imposition of the 25% tariffs, President Trump had threatened to implement secondary tariffs of 100%, starting in early August, on countries that buy Russian oil and gas, unless a ceasefire deal between Russia and Ukraine was reached. While not formally labeled as "secondary sanctions," the structure and rationale of the measure resemble prior efforts to align countries with U.S. sanctions policy.
In his public remarks on Truth Social on July 30, 2025, President Trump criticized India's high tariffs and non-monetary trade barriers, noting that while the country is an ally, it has "the most strenuous and obnoxious non-monetary Trade Barriers of any Country."4 He also remarked on India's continued purchases of military equipment and energy from Russia as a key concern, particularly in light of the ongoing war in Ukraine. As highlighted in our previous post on June 9, 2025, there has been a recent bipartisan push for additional pressure and sanctions to be imposed on Russia. India's involvement in the Russian oil sector was previously permitted by the U.S., provided it adhered to the $60 price cap imposed by the G-7. According to comments from U.S. officials, this arrangement was designed to ensure that Russian oil continued to flow into global markets, but at a price point that significantly curtailed Russia's oil revenues. This recent action marks a significant shift in U.S. policy, specifically targeting Indian imports and imposing an additional penalty for countries involved in the Russian oil sector.
Targeted Sectors and Exemptions
The August 6 E.O. does not override the exemptions listed in Annex II to E.O. 14257, meaning that pharmaceuticals, semiconductors, critical minerals, energy products, and certain electronics (e.g., smartphones and computers) remain exempt from the additional 25% tariff. However, the stacking of tariffs is now explicitly authorized: the 25% Russia-related tariff is in addition to the reciprocal tariff imposed under E.O. 14257, unless the goods fall within the specified exemptions. That E.O. also confirms that goods already in transit before August 27, 2025, are exempt from the additional 25% tariff, provided they enter the U.S. before September 17, 2025. We note that the 25% base tariffs only exempt goods already in transit before August 7, provided they are entered for consumption, or withdrawn from warehouse for consumption, before October 5, 2025. These carve-outs reflect strategic supply chain considerations rather than broad sectoral exemptions. In light of recent commentary surrounding tariffs on India, these exemptions should be closely monitored for changes and developments.
Additionally, to deter tariff evasion through transshipment, the July 31 E.O. imposes a 40% ad valorem duty on any article that U.S. Customs and Border Protection ("CBP") determines was transshipped to circumvent the 25% tariff. This penalty is in lieu of the standard tariff and is accompanied by enforcement measures including fines under 19 U.S.C. § 1592, other applicable U.S. duties and charges, and public identification of violators and facilities involved in circumvention schemes. Notably, CBP is barred from granting mitigation or remission of these penalties under existing law.
We note that there has been commentary in the context of tariffs on other countries that indicate that additional sectoral exemptions may be considered by the Trump Administration. Specifically, U.S. Commerce Secretary Howard Lutnick in an interview on July 29, 2025, remarked that "[i]f you grow something and we don't grow it, that can come in for zero, so if we do a deal with a country that grows mangos, pineapple, then they can come in without a tariff, because coffee and cocoa will be other examples of natural resources."5
Potential Expansion of Additional Tariffs on Other Countries
As noted above, the August 6 E.O. also establishes a monitoring and recommendation framework directing the Secretaries of Commerce, State, and Treasury to evaluate other countries' involvement in Russian oil imports and recommend similar tariff actions. The E.O. does not mention any exemption for purchases of Russian oil that comply with the G-7's $60 price cap. Instead, the Order broadly targets direct and indirect imports of Russian oil, and emphasizes India's resale of Russian oil "often at significant profit," without distinguishing between capped and uncapped transactions.
This framework signals potential additional pressure on countries beyond India, particularly those engaged in resale or indirect trade of Russian oil. Following the E.O., any evaluation by the U.S. will consider the scale, nature, and strategic impact of such imports, including whether they materially support Russia's energy revenues or circumvent existing sanctions. Accordingly there is potential for similar additional ad valorem tariffs to be announced on other countries in the near future.
Business Considerations
The base 25% tariff on India goes into effect on August 7, 2025, and the additional 25% tariff imposed will take effect on August 27, 2025, resulting in a combined 50% tariff unless exemptions apply. For companies with exposure to Indian supply chains or operations, this is a critical moment. While the situation continues to develop, businesses should closely assess potential impacts on their supply chains and prepare respective contingency plans in the event of potential trade disruptions arising from regulatory changes. Such plans should also account for additional potential increases of tariffs on India.
The Government of India has previously engaged in diplomatic discussions with the U.S. on trade matters. Given the depth of the U.S.-India economic relationship, the situation is being closely watched by companies and policymakers in both countries. We are monitoring government channels on this topic, and will update this post in the event of any developments arising from ongoing negotiations between the U.S. and Russia this week.
Footnotes
1. Notably, the 25% rate is slightly lower than the 26% tariff President Trump previously announced on "Liberation Day" earlier this year.
2. Trump Says He'll Raise India Tariffs Over Russian Oil: Live Updates - The New York Times.
3. Truth Details | Truth Social.
4. Truth Details | Truth Social.
5. Coffee and cocoa could be exempt from tariffs in trade deals, commerce secretary says | Reuters.
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